Strategy, Execution and Operational Excellence

February 17th, 2013

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What is a strategy?  Where do you separate strategy from execution?  What value does Operational Excellence offer?  Why does any of this matter?

Quite simply, strategy is a decision about who you wish to serve, how you wish to serve them so as to deliver value and what capabilities are needed to succeed.   Answering these questions provides the guidelines by which to allocate resources.

On the other hand, execution takes your strategic decisions and converts them into a vision, mission and operational plans.  If you’re a regular reader of our blog, you’ll know we connect operational plans from each functional area to improvement projects by using core value streams.  Identified performance gaps in the value streams are the building blocks of an Operational Excellence effort.

Why are these distinctions important?  Describing vision, mission, operational plans and operational excellence activities as strategies confuses the journey with the destination.   That mistake ensures you'll never arrive anywhere.   It also strips away the value of helping a client choose the means by which to execute a strategy.  Putting the cart ahead of the horse, yields both a useless cart and useless horse.

I tell prospects, clients and partners; we’re here to help execute on strategies but we assume those strategies are in place.  One of our value propositions to our clients is that we will develop a governance map from a top level scorecard at the highest point to the deepest sub-processes at which improvement opportunities reside.  There we specify business improvement cases and projects.  However, we expect the client to choose and weight the criteria by which to prioritize the projects for execution so we can allocate resources such as budget and personnel.

It is the choosing and weighting of criteria for project ranking that tells me if a company has a clear strategy.  As previously stated, a strategy specifies what customers a company wishes to serve, how it wishes to serve them to deliver value and what capabilities are needed.  These decisions provide the guidelines by which to allocate resources.  When a company has a very difficult time ranking and rating projects, much less being consistent over time, it is clear they don’t have a clear strategy that is understood by everyone.

Systematically Driving Value with OpEx

When a company doesn’t have a clear strategy, improvement initiatives run into common problems.  The company develops a long list of projects but they are all equally critical.  People work on many projects spending a little time on each and never getting any of them done.

So for those of you about to start or restart an improvement initiative, the first thing you want to make sure of is that you have a clear strategy.  Test yourself by looking at the many projects currently running in your organization.  Are they prioritized?  If prioritized, do the priorities change on short notice or are they consistent?  If not, try to prioritize them.  Can it be done without ending up with all high priority? Can you get to three or four key initiatives?
In conclusion, make sure you separate strategy from execution.  Use the allocation of resources to various execution problems as a test of whether you have a clear strategy.  If you have trouble prioritizing, go slow with your improvement efforts lest you expend a lot of resources on shifting priorities.  Press for clarity and use the many iterations of prioritization as exercises in drawing out a strategy.

If you’d like to discuss, feel free to contact me

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  1. February 18th, 2013 at 13:10 | #1

    Hi ssqi.com:

    It’s interesting your comments about Strategy Stage and about Execution Stage…

    1. Where the Strategy begins and ends? (according with your blog, begins with 3-questions and ends with Strategic Decisions
    2. Where the Execution begins and ends? (according with your blog, begins with Vision, Mission and Operational Plans and ends with Results)

    Questions:

    a. Are you sure that the Strategy Stage ends with Strategic Decisions?
    b. Are you sure that the Execution Stage begins with Vision, Mission and Operational Plans?

    Thanks

    Jose A Venegas

  2. February 20th, 2013 at 22:18 | #2

    I believe strategy is about choosing whom you wish to serve and how you want to serve them so as to provide unique value. Operational plans are without a doubt about execution. There are Operating Strategies but they aren’t Enterprise Strategies. Some might argue Vision and Mission are Strategic Decisions. To me, if you are thinking about Vision and Mission before you decide on who your serving, you’ve put the cart before the horse. So you can only think about them after the customer decision. While I’ve expressed these ideas in my own way, they are consistent with what I believe to be the core foundation writings on the subject.

    But honestly, that is a bit of a theoretical discussion. The real point of the post is to highlight that through a governance map, you drive execution. And helping people execute on their strategies is what we do.

    Thanks for your questions.

    John

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